As the broader cryptocurrency market experienced a downturn, the price of Aave (AAVE) declined by nearly 10% this week, finding a local bottom around $153. The altcoin is currently trading in the $155-$160 range, but technical analysis points to a potential breakout as it approaches a crucial support level.
Market analyst Ali Martinez highlighted on January 23 that AAVE is trading within a falling wedge pattern on the 4-hour chart. This pattern, defined by a descending trendline of lower highs and a key support zone near $145, often signals consolidation after a downtrend. The $144.93 level has acted as a demand zone multiple times during the current correction, which began after AAVE peaked above $350 earlier in the cycle.
Martinez's analysis indicates that a decisive break below $145 could trigger an accelerated move down toward the next major support around $125, confirming a continuation of the bearish trend. Conversely, a successful defense of this support, coupled with a break above the wedge's descending trendline, could pave the way for a rebound toward resistance levels at $162 and potentially $200 over time.
Despite the price weakness, derivatives data reveals a measured market response. AAVE's Aggregated Open Interest (OI) has remained stable around $130 million, and Funding Rates have stayed positive, indicating that traders are not rushing to exit their long positions. The RSI is neutral, and while the MACD is in negative territory, its histogram is flattening, suggesting weakening bearish momentum.
Fundamentally, the Aave protocol is approaching a significant milestone, nearing $1 trillion in cumulative loans originated. This figure reflects the high-frequency reuse of liquidity within the ecosystem, powered by features like flash loans, efficient borrowing tools, and multi-chain expansion. The sustained demand for on-chain credit has propelled loan volumes to levels comparable with major traditional banks.
